1) Think back to 2008, a couple of days before the Lehman failure. Looking at the data in hand, you would see GDP growth at about 1% in Q1 and 3% in Q2. More specifically, Q2 GDP growth had just been revised up on August 28 from 1.9% to 3.3%, sparking a 212-point Dow rally that day. http://www.nytimes.com/2008/08/29/business/29econ.html?_r=0

2) In March 2001, 95% of economists thought there would not be a recession, but one had already begun.

3) No economist predicted the 1990-91 recession beforehand.

4) Hardly any economists recognized the severe 1973-75 recession until almost a year after it started. Indeed, that recession began with the ISM at 68.1, and payroll jobs growth did not turn negative for eight months.

5) In 1970, unaware that the economy was nine months into recession, none other than Paul Samuelson said that the NBER had worked itself out of a job, meaning that improved policy expertise had made recessions very unlikely.

6) In three of the last 15 recessions – specifically, in 1980, 1945, and 1926-27 during the Roaring Twenties – stock prices remained in a cyclical upturn.

ECRI has caught a lot of crap for their recession call last Fall. I know the feeling, as most economists I know (yes, I travel in exciting circles) think the worst is over. I wish I shared their optimism.

I mention this because of the positive ISM Mfg Report released this morning. It’s being cited as proof of expanding activity. Remember, the PMI is a survey of purchasing managers’ opinions about their business.

They read the same newspapers and websites, watch the same TV, and are subject to the same MSM brainwashing as the rest of us. A better than expected snapshot in time of their opinions doesnot mean the economy is just fine.

UPDATE: 10:35 AM

We got a bounce off 1501 — pretty close to the 1495-1500 range where we expected it.

Any push back into green territory would be cause for an intraday long with tight stops, but not for giving up shorts.

We just hit the .500 Fib of this morning’s decline, and the .618 is at 1516.63. The top of the white channel is up ahead at 1518.50. Any of these would take the index positive on the day.